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Substance use among adolescent students with consideration of budget constraints

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Abstract

This paper estimates the demand for cigarettes, alcohol, and marijuana with consideration of the other goods that might exist in a teenager’s utility function. Youth tend to have small incomes and limited wants, with the result that many students spend the bulk of their income on only a few items such as fast food, clothing, and entertainment. In this paper, we examine the influence of changes in the prices of goods commonly bought by teenagers on the demand for cigarettes, alcohol, and marijuana. We estimate own and cross price effects using the prices of the illicit substances and other consumer products including gasoline, clothing, entertainment, and fast food. Income effects are also estimated and show that teens with higher incomes and allowances are more likely to use substances. The implications of higher excise taxes on different products are discussed.

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Notes

  1. An alternative estimation strategy might be to use an Almost Ideal Demand System (AIDS). The estimation of AIDS requires data on expenditures for all goods in the system. While we have measures of prices for many products, quantity data is only available for cigarettes, alcohol and marijuana.

  2. Dropouts are much more likely to live with no parents (32% of dropouts live with no parents as opposed to 10% for teens in school), and have much higher average earned incomes.

  3. Models were tested with the per capita number of employees and results do not change. The absolute number of employees is used as a proxy for presence of large breweries within the state.

  4. Linear probability models are used for the participation equations with the standard errors adjusted according to White (1980).

  5. Eighty-nine percent of the sample remains in the same county, and 95% remain within the same state during the sample period.

  6. ACCRA also provides gasoline prices, however, these prices pertain only to recognized national brands and exclude regional discount brands which may be an important source for gas sales to young drivers. Also, given the frequent variations in gas prices, we prefer the monthly Department of Energy price to the ACCRA quarterly price. Results with the ACCRA price are similar, with some exceptions, and are available upon request.

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Authors and Affiliations

  1. Department of Economics, Emory University, 1602 Fishburne Dr., Atlanta, GA, 30322, USA

    Sara Markowitz

  2. NBER, Cambridge, MA, USA

    Sara Markowitz & John Tauras

  3. University of Illinois, Chicago, IL, USA

    John Tauras

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  1. Sara Markowitz
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  2. John Tauras
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Correspondence to Sara Markowitz.

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Markowitz, S., Tauras, J. Substance use among adolescent students with consideration of budget constraints. Rev Econ Household 7, 423–446 (2009). https://doi.org/10.1007/s11150-009-9049-6

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  • DOI: https://doi.org/10.1007/s11150-009-9049-6

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